Cm-ecf Fac Final-filed W-exh May 9 2013

7/27/2019 Cm-ecf Fac Final-filed W-exh May 9 2013

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Nancy Duffy McCarron, CBN 164780Law Office of Nancy Duffy McCarron950 Roble LaneSanta Barbara, CA 93103805-450-0450 fax [email protected]

Real Estate Broker Lic. 853086Attorney for Plaintiff Carole S. Alles

UNITED STATES DISTRICT COURTCENTRAL DISTRICT OF CALIFORNIA

[EASTERN DIVISION]

CAROLE S. ALLESPlaintiff,

v.WELLS FARGO BANK, NA; dbaWells Fargo Home Mortgage

FEDERAL HOME LOANMORTGAGE CORPORATION,aka FHLMC; akaFreddie Mac; in itscorporate capacity, as trustee of anunidentified REMIC trust holdingplaintiffs debt obligation as securitywithout her knowledge or consent to

securitization; as conservatee under theconservatorship of defendant FederalHome Finance Agency [FHFA] as itsconservator of unknown duration;

DIRECTOR OF FEDERAL HOMEFINANCE AGENCY, aka FHFA, asconservator for defendantFreddie Mac

CAL-WESTERN RECONVEYANCECORPORATION, aka CWRC in its

corporate capacity and as the foreclosingtrustee on plaintiffs real property

DOES 1-100 Defendants

Case No. 5:12-cv-02095-MWF-DTB filed 11/29/12

FIRST AMENDED COMPLAINT [FAC]

(1) Declaratory Relief

(2) Cancellation of Instrument & Injunction [Civil 3412-3422]

(3) Slander of Title

(4) Quasi Contract & Unjust Enrichment

(5) Violation of 15 USC 1641(g) TILA 131(g)

(6) Quiet Title

(7) B&P 1700 et seq.

(8) Breach of Contract

(9) Violation-Civil 2923.5 Unlawful Pre-Foreclosure Acts

(10)Civil Conspiracy-Defraud, violate codes & Due Process

(11)Fraud (Actual & Constructive) Civil Code 1572-1575

(12)5th. & 14th. Amendment Due Process Violations andFHFA (Freddie Mac) federal actors

(13)Violations of ECOA discrimination [Age & Disability]

15USC 1691-Unruh-Civil 51 et seq.; 42 USC 1983

(14)Violations of California Homeowners Bill of Rights

DEMANDFORATTORNEYFEESASENTITLED

DEMANDFORJURYTRIAL, RULE 38(B)

FIRST AMENDED COMPLAINT

FAC is timely filed on 5/9/13 as the court gave plaintiff 14 days to amend after a 4/25/13 order.

Case 5:12-cv-02095-MWF-DTB Document 49 Filed 05/09/13 Page 1 of 170 Page ID #:1901


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JURISDICTION AND VENUE

1. This Court has jurisdiction under 28 U.S.C.1331, 1332, 1343, 1367, 42 U.S.C.1983 to

address deprivation of rights secured by federal law & matters between diverse citizens involving

an amount in controversy exceeding $75,000. This Court has supplemental jurisdiction under28 U.S.C. 1367 to address related common law torts and claims, including unjust enrichment,

fraud, and multiple violations of Californias Codes and Regulations, which are state law claims.

2. Venue is appropriate in this judicial district under 28 U.S.C. 1391(h) because the events

which gave rise to this Complaint occurred in this judicial district, specifically Riverside County.

THE PARTIES

3. PlaintiffCAROLE S. ALLES[ALLES] is a United States citizen residing in Riverside

County at 43060 Illinois Avenue, Palm Desert, California, 92211 within this judicial district.

At 71 she is an unemployed homeowner, disabled with an inoperable, incurable lung disease,

who receives $857 monthly in earned Social Security Benefits. Plaintiff supplements her income

by leasing two rooms in her residence for $1275 month total to help make mortgage payments.

Plaintiff brought this action to prevent the fraudulent foreclosure of her home by a party who had

no standing to foreclose, prosecuted by a conspiring foreclosure trustee and to address intentional

concealment of the true beneficiaries who own the security interest recorded against her property.

4. Defendant WELLS FARGO BANK, NA[WELLS] is a National Association of bankers,

with a principal place of business in San Francisco, California. WELLS is the primary operating

subsidiary of Wells Fargo & Company [WFC] a company engaging in international banking, as

well as sales and marketing of insurance, securities and investments in a worldwide market.1

1 Wells Fargo & Co. (WFC) is a diversified financial services company providing banking,

insurance, investments, mortgage and consumer finance through almost 9,000 stores, 12,000

ATMs, the internet and other distribution channels across North America and internationally.Total assets: US$ 1.404 trillion (as of March 31, 2013). Net income: US $12.4 billion (2010),

US $ 15.9 billion (2011), US $18.9 billion (2012). Wells Fargo is the 4th largest bank in the US

by assets and the 1st largest bank by market capitalization. Wells Fargo operates stores and

ATMs under the Wells Fargo and Wachovia names. The firm's primary U.S. operatingsubsidiary is national bank Wells Fargo Bank. Wells Fargo is a result of an acquisition of Wells

Fargo & Company by Norwest Corporation in 1998 and the subsequent 2008 acquisitionof Wachovia Corporation quoted directly from: http://www.banksdaily.com/info/wells-fargo



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5. WELLS is deemed to be a corporation underCalifornias Corporations Code 4820.2

WELLS conducted business under fictitious names, including, Wells Fargo Home Mortgage

[WFHM] whose name appeared on the top of nearly all articles of correspondence plaintiff has

received since August 2006, reciting the same address where plaintiff sent her monthly mortgagepayments since 2006. In its Answer to the verified complaintWELLS alleged that Wells Fargo

Home Mortgage mergedinto Wells Fargo Bank, NA. This could only have occurred under Corp.

4805.13. WFHM could only have merged as a disappearingstate depository corporation under

Corp. 4805.17;4820.5. WELLS, survivingfederal depository corporation doing business in

California is subject to its banking laws [Corp. 99 et seq.] under Corp. 163 unless preempted.

6. WELLS was the wholesale originatorof plaintiffs loan, acting only as a nominallender, but

was not the actual investor who funded the loan. Plaintiffs loan was pre-sold during her escrow

on the secondary mortgage market to defendant Freddie Mac [identified below] during escrow,

to be securitized by Freddie Mac into a large loan pool, without plaintiffs knowledge or consent.

WELLS pre-sale of the ALLES to Freddie Mac purportedly closed escrow on 9/13/2006.

WELLS has always represented that it was/is the loan servicer of ALLES home loan and has

always collected ALLES monthly payments since her purchase escrow closed on August 1, 2006

7. Defendant FEDERAL HOME LOAN MORTGAGE CORPORATION, aka FHLMC,

aka FREDDIE MAC[Freddie Mac] is a public government-sponsored enterprise [GSE],

headquartered in the Tyson's Corner CDP in unincorporated Fairfax County, Virginia. Congress

created Freddie Mac in 1970 to expand the secondary mortgage market in the United States.

With other GSEs Freddie Mac bought/buys mortgages on the secondary market, pooled/pools

them and sold/sells fractional interests in intangible debt obligations created by tangible notes in

the pools as Mortgage Backed Securities [MBS] [bonds], to investors in an international market.

This secondary mortgage market increases the supply of money available for mortgage lending

and increases the money available for new home purchases, a valid government goal since 1938.

To this end, in 1970 Congress intended to stimulate the economy by creating new jobs in the

construction industry while encouraging home ownership across the United States of America.

2 Any further references to Californias Corporations Code will be cited at Corp.



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8. On September 7, 2008 Defendant Federal Housing Finance Agency aka FHFA [identified

below] director James B. Lockhart III announced he had put Fannie Mae and Freddie Mac under

FHFA conservatorship. His action has been described as "one of the most sweeping government

interventions in private financial markets in decades." Moody's gave Freddie Mac's preferredstock an investment grade rating of A1 until August 22, 2008 when Warren Buffett said publicly

that both Freddie Mac and Fannie Mae had tried to attract him and others. Moody's changed

the credit rating on that day to Baa3, the lowest investment grade credit rating.

9. Freddie Mac's senior debt credit rating remains Aaa/AAA from each of the major ratings

agencies Moody's, S&P, and Fitch. The United States Department of the Treasury contracted to

acquire U.S. $1 billion in Freddie Mac senior preferred stock paying at a rate of 10% per year,

and the total investment may subsequently rise to as much as US $200 billion. Home loan

interest rates may go down as a result and owners of Freddie Mac debt and the Asian central

banks who had increased their holdings in these bonds may be protected. Shares of Freddie Mac

stock, however, plummeted to about one U.S. dollar on September 8, 2008, and dropped a further

50% on June 16, 2010, when FHFA ordered the stocks delisted. In 2008 the yield on U.S

Treasury securities rose in anticipation of increased U.S. federal debt.

10. Defendant DIRECTOR OF FEDERAL HOUSING FINANCE AGENCY, akaFHFA,

was created by Congress on 7/30/2008 to act as the conservator for Freddie Mac and Fannie Mae

[two Government Sponsored Enterprises, nearly insolvent] as explained on FHFAs website.3

3 Federal Housing Finance Agency (FHFA) was created on July 30, 2008, when the President

signed into law the Housing and Economic Recovery Act of 2008. The Act gave FHFA the

authorities necessary to oversee vital components of our countrys secondary mortgage markets

Fannie Mae, Freddie Mac, and the Federal Home Loan Banks FHFA's mission is to provide

effective supervision, regulation and housing mission oversight of Fannie Mae, Freddie Mac and

the Federal Home Loan Banks to promote their safety and soundness, support housing financeand affordable housing, and support a stable and liquid mortgage market. As of September 2010,

the combined debt and obligations of these GSEs totaled $6.7 trillion, which is $2.7 trillion

below the total publicly held debt of the USA. Freddie Mac and Fannie Mae also purchased or

guaranteed 65% of new mortgage originations. Considering the impact of these GSEs on the U.S.

economy and mortgage market, it is critical that we intensify our focus on oversight of Fannie

Mae, Freddie Mac, and the Federal Home Loan Banks. see www.fhfa.gov [about us]



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Defendant CAL-WESTERN RECONVEYANCE CORPORATION, aka CWRC, is a the

trustee who is foreclosing ALLES loan for WELLS as its substituted trustee. CWRC advertised

a trustee sale for 12-19-12 and has postponed the sale several times. CWRC most recently

advertized a trustee sale for 6/4/2013 at a website posting notices for all CWRC trustee sales:http://www.rppsales.com/index.php?option=com_wrapper&view=wrapper&Itemid=144

DOE DEFENDANTS, AGENCY, CONSPIRACY, JOINT & SEVERALLIABILITY

11. DOES 1-100 inclusive: use of the term Defendants in any FAC allegations, unless

otherwise set forth, includes and charge all defendants jointly and severally, not only the named

Defendant, but all Defendants designated as DOES 1-100. Plaintiff is informed and believes, and

thereon alleges at all times mentioned herein, DOE Defendants were agents, servants, employees,alter egos, superiors, successors in interest, joint venturers and/or co-conspirators of each of their

co-defendants, and in doing the things mentioned, or acting within the course and scope of their

authority of such agents, servants, employees, alter egos, superiors, successors in interest, joint

venturers and/ or co-conspirators with permission & consent of co-defendants and, consequently,

each Defendant named, and Defendants named as DOES 1-100, inclusive, are jointly & severally

liable to Plaintiff for damages & harm sustained as a result of alleged wrongful acts. Defendants,

and each of them, aided & abetted, encouraged, & rendered substantial assistance to the others in

breaching obligations to Plaintiff, as alleged. In taking alleged actions to aid,abet & substantially

assist commissions of wrongful acts & other wrongs complained of, each of the Defendants acted

with an awareness of its primary wrongdoing & realized its conduct would substantially assist in

accomplishment of wrongful conduct, wrongful goals, and wrongdoing. Defendants, and each of

them, knowingly & willfully conspired, engaged in a common enterprise & in a common course

of conduct to accomplish alleged wrongs. The purpose & effect of the conspiracy, common

enterprise & common course of conduct complained of was, inter alia, to financially benefit them

at Plaintiffs expense by engaging in fraud & concealment of material facts before & after escrow

closed, and to date. Defendants accomplished their conspiracy, common enterprise & course of

conduct by misrepresenting and concealing material information regarding the servicing of loans,

and by taking steps and making statements in furtherance of wrongdoings as specified herein.



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12. Each Defendant was a direct, necessary & substantial participant in a conspiracy, common

enterprise & common course of conduct as alleged, and was aware of its overall contribution to

& furtherance thereof. Defendants wrongful acts include, inter alia, all of the acts that each of

them are alleged to have committed in furtherance of the wrongful conduct as alleged herein.TOLLING STATUTES OF LIMITATIONS DUE TO FRAUDULENT CONCEALMENT

13. Any applicable statutes of limitations have been tolled by the Defendants continuing,

knowing, and active concealment of the facts as alleged herein. Despite exercising reasonable

diligence, plaintiff could not have discovered, did not discover, and was prevented from

discovering, the wrongdoing complained of herein. Defendants should be estopped from relying

on any statutes of limitations as they were/have been under a continuing duty to disclose the true

character, nature & quality of their financial services and debt collection practices. Defendants

owed an affirmative duty of full & fair disclosure, but knowingly failed to discharge such duties

when statutorily bound to disclose by 15 USC 1641(g) and CA Homeowners Bill of Rights.

HISTORICAL ALLEGATIONS COMMON TO ALL CLAIMS AND PARTIES

(verified by plaintiff and including supporting evidentiary exhibits)

14. On 7/28/2006 while still employed plaintiff bought a home at 43060 Illinois Avenue, Palm

Desert, California 92111. WELLS wholesaled the loan and was only a nominal lender on a note.

15. Exhibit A is a true copy of the 3-page $230,000 note plaintiff executed at 6.75% fixed rate

of interest, for a 30 year amortized term, at $1,491.78 monthly payments until August 1, 2036.

The note was secured by a trust deed recorded against the property at Riverside county recorders

16. Plaintiffs loan was pre-sold in escrow and conveyed into a large pool of securitized loans.

On 9/13/2006 certificate holders in a Freddie Mac trust became the beneficial owners. Exhibit B

17. Plaintiff believed WELLS was lender and loan servicer because her note and trust deed

recited WELLS name as lender and included WELLS address as the place to mail her payments,

which implied that WELLS was the only entity involved in her loan. No one involved in the

escrow ever disclosed to ALLES that her loan was pre-soldduring escrow to Freddie Mac, to be

transmuted to a Collateral Debt Obligation [CDO], sold by Wall St. brokers as investment bonds,

and that her Loan Servicer would be bound by terms in a Freddie Mac Seller/Servicer Agreement

notto modify/forbear on any loan. Alles never consented to these material loan term changes.



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18. ALLES had committed to home loans during her past life, but each loan negotiated by the

bank had been held in its portfolio. ALLES had always made monthly payments to a traditional

lender in the past. ALLES could talk to a manager at any time about her traditional mortgage.

19. For example, if ALLES became unemployed or sick she could have approached a bankmanager to ask him to forebear for a few months, with an agreement to tack on missed payments

to the tail end of her loan. The bank manager could elect to forebear for a few months, rather

than foreclose, which would result in significant bank savings on legal fees and trustee costs.

20. ALLES assumed her 7/28/06 WELLS loan would work as loans in her past life had worked

21. If the true facts had been disclosed by anyone during escrow plaintiff would not have

executed the note or trust deed. Plaintiff would have continued to rent an apartment or would

have obtained a traditional loan from a lending institution which held loans in its own portfolio.

22. With a credit rating close to 800 points plaintiff could have obtained a traditional loan.

23. After engaging counsel plaintiff discovered WELLS had a statutory duty to notify her

in writing when there was a change in beneficiary. 15 USC 1641(g). Neither WELLS nor

Freddie Mac ever notified Alles that a new lender [a Freddie Mac Trust] owned her loan.

24. On 12/7/12 CWRC recorded WELLS purported assignmentof the security interest [TD]

toFreddie Mac which was executed byMonica Gonzalez[a CWRC agent] as attorney in factfor

Wells Fargo Bank, NA. [Exh. C]. Neither WELLS nor Freddie Mac ever mailed a copy of the

purported assignment to ALLES, whose attorney discovered the assignment for the first time in a

request from First American Title Company for a title report. ALLES never understood why a

second assignment [WELLS to Freddie Mac] would have been necessary as Freddie Macs

website confirmed a 9/13/06 acquisition of the loan [Exh.B] Wells should have assigned it then.

25. ALLES did not understand why neither WELLS nor Freddie Mac recorded the assignment

on 9/13/2006 ---the purported date Freddie Mac purchased her loan from seller/servicer WELLS.

WELLS never notified ALLES thatFreddie Mac had been placed under a conservatorship by our

government on September 7, 2008 or that FHFA, as conservator for Freddie Mac, was the only

entity who had authority to direct Freddie Mac to approve a loan modification. Plaintiff had

applied for a loan modification with WELLS because she believed WELLS was the only entity

who had authority to approve or deny a modification as she believed WELLS was beneficiary.



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26. WELLS agents never disclosed inherent conflict in having WELLS, as the loan servicer,

approve modifications as WELLS would gain substantially more profit [$6,000] by foreclosing

rather than it would realize by modifying [ a $1,000 stipend from the federal government].

27. After the 2008 collapse of numerous banks the recession hit Palm Desert with a vengeance.Home values dropped to half of their 2006 market value when ALLES purchased her residence.

The ALLES home is currently assessed at only $105,000 for tax year 2012-2013. [Exhibit D].

28. ALLES paid $330,000 for the home in 2006. If ALLES home is foreclosed she will lose

her entire investment and have to return to renting an apartment. ALLES cannot qualify to buy

another home as her 800 credit score is ruined due to foreclosure. WELLS acted in bad faith in

promising to modify her loan while simultaneously foreclosing. Plaintiffs attorney discovered

that engaging in dual tracking violated Exhibit A of a consent agreement WELLS had signed on

April 4, 2012. Plaintiffs attorney discovered 22 additional violations of the terms ofExhibit A

of WELLS consent agreement, which vitiated any potential immunity under Civil 2924.12(g)

29. After home values in Palm Desert dropped in half by 2009 plaintiff started to call WELLS

agents to ask for a reduction in her 6.75% fixed interest rate. Plaintiff had a history of timely

making mortgage payments. Plaintiff always had at least two tenants sharing her home to make

the monthly mortgage payments. Plaintiff did not make a profit on the rental income as 100%

of the income was used to pay her monthly mortgage, fire insurance and county real estate taxes.

30. By 2009 rents dropped significantly--forcing ALLES to reduce rents to avoid vacancies.

31. Plaintiff had to infuse $300-$400 per month to make mortgage payments, pay taxes and

fire insurance depleting her savings account. If WELLS had modified her loan to the 2% HAMP

rate, or 3% conventional rate her payment would have dropped from $1491 to $900 per month.

Her payment would have dropped to $500 per month if she had received a principal reduction.

ALLES could have easily afforded to pay if WELLS had modified her loan as she rarely had a

vacancy on the rental rooms as the home is on the golf course fairway-- a popular rental location.

ALLES enjoyed having tenants as otherwise she would be living completely alone in the home.

32. Alles called every few months to ask if she could get a loan modification while watching

interest rates drop from 6.75% down to 6%, then 5%, 4%, and finally down to the 3% range.



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33. Each time rates dropped ALLES called WELLS agents to inquire about a modification.

Each time the WELLS agent told ALLES she was not eligible for a modification because she was

not currently in default and WELLS only modified loans which were currently in default.

34. By 2011, which was the most recent time she called a WELLS agent to inquire about aloan modification, the agent advised her to stop making payments to trigger a default rendering

hereligible fora loan modification. The WELLS agent told ALLES that so long as she kept

making timely payments at a high fixed rate (6.7%) WELLS would not modify her loan.

35. ALLES relied on advice from the WELLS agent as she had little knowledge of financing.

ALLES decided to stop making payments after February of 2012 to trigger eligibility to modify.

36. ALLES thought she would qualify for a hardship modification because she was over 70,

was unemployed, and was disabled with an incurable, inoperable lung disease causing coughing.

37. Instead of modifying her loan WELLS filed a Notice of Default on 8/2/2012, including a

declaration under CC 2923.5 signed byDeatrice Hemphillfrom Wells Fargo in Fort Hill, SC.

(Exhibit E) The declaration recited the beneficiary tried with due diligence but was unable to

contact the borrower to discuss the borrowers financial situation and to explore options for the

borrower to avoid foreclosureand more than 30 days has past. These statements were false.

38. No beneficiary ever called ALLES to discuss her financial situation. ALLES has had

the same cell phone number since she bought the home in 2006 and has always had it activated.

39. ALLES never received a call from anyone to discuss her financial situation or options.

40. The last time ALLES had called WELLS was in 2011. No agent called ALLES in 2012.

41. ALLES would have returned any call from a WELLS agent to discuss her loan situation.

Deitrice Hemphilldid not sign her declaration under oath and her statements are simply not true.

42. ALLES attorney filed an application for a HAMP modification through the Inland Empire

HUD-approved consultant. WELLS denied ALLES application on 11/8/12 despite an NPV

report, populated by her attorney at HAMPs website, showing she qualified for a modification.

43. In a denial letter dated 11/8/2012 Wells promised not to foreclose during a 30-day window

while ALLES appealed. (Exhibit F) ALLES attorney immediately appealed and escalated a

complaint to Freddie Mac online. Despite WELLS promise not to foreclose CWRC recorded a

Notice of Sale a weekend before Thanksgiving setting a sale for 12/19/12-right before Christmas.



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44. A CWRC server nailed theNOS on ALLES front door the weekend before Thanksgiving.

ALLES went to visit her son over Thanksgiving but could not enjoy the holidays with the threat

of being homeless right before Christmas despite WELLS written promise not to sell the home.

45. ALLES attorney called the escalation contact person the day after filing an appeal to seeif staff had received the escalation complaintby email. The assigned staff person (John) told

ALLES attorney the appeal had already been denied the next day after they received it by email.

46. No one ever disclosed to ALLES or her attorney that she could have applied for a new

Freddie Macsimplified modification for borrowers who did not qualify for HAMP or HARP.

47. ALLES believes WELLS had/has only one agenda--to foreclose and steal her home.

48. Wells postponed the trustee sale originally set for 12/19/2012 to a new date of 12/29/2012

ALLES paid an agent to attend the original sale to listen to the auctioneer who arrived late and

then postponed the sale to 12/29/12. CWRC did not send Alles written notice of postponement.

WELLS postponed again on 12/29/2012 to January 2013, without sending her any written notice.

CWRC postponed the sale a thirdtime in January to March 2013, then postponed afourth time to

April 30, 2013. WELLS postponed a fifth time to June 4, 2013 which sale is currently pending.

Every time the sale was postponed ALLES returned to an agitated mental state, while the sale

remained in pending, resulting in significant stress to her mental state.

49. WELLS never disclosed the following facts:

Plaintiff's original note, payable to Wells Fargo Bank, NA [WELLS] was sold within a

month of origination to Freddie Mac who published a September 13, 2006settlementdate.

Freddie Mac required WELLS to transfer its security interest [the intangible debt obligation

created by ALLES tangible note] to Freddie Mac by executing an assignment of its security

interest [the trust deed] to Freddie Mac, who directed Wellsnot to record the assignment,

per its master contractwith lenders; Seller/Servicing Guide [the Guide] 2.14 as follows:

Freddie Mac and Seller/Servicers perpetrated fraud on courts, debtor and the public by

conspiring to conceal and concealing its ownership [by not recording the assignments].

Case 5:12-cv-02095-MWF-DTB Document 49 Filed 05/09/13 Page 10 of 170 Page ID#:1910


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50. The FM Guide required the note to be endorsed in blank. Freddie Mac sold each loan to

one of its own previously created Mortgage Backed Security Trusts [MBST]. Freddie Mac took a

commission on each transaction while acting as Seller into its Trusts, as Depositor into its

Trusts and as Trustee of its REMIC Trusts. Each sale was a true sale without recourse. Pursuantto a Congressional exemption forGovernment Sponsored Entities [GSEs] Freddie Mac was not

required to report these trust transactions to the Securities and Exchange Commission ["SEC"].

Sponsors of private Mortgage Backed Security Trusts [MBST] were required to report to SEC.

51. Freddie Mac [FM] guaranteed payment to investors, opening flood gates to a worldwide

market of even the most conservative of investors. FM sold Participation Certificates[PCs]

to investors who acquired afractional, beneficial interestin each intangible debt obligation

created by tangible notespurportedly held in trust by Freddie Mac as the REMIC trustee.

Each certificate holder received a monthlyyieldon its PC with payments guaranteed by FM.

52. Freddie Mac created these REMIC trusts under New York Trust Law, which required each

assignment, after a true sale into a REMIC trust, to be recorded at the County Recorders office,

but this never occurred as 22.14 of FM Guide prohibited servicers from recording assignments.

53. FMs business model failed because either Seller/Servicers failed to endorse the notes in

blank; or they failed to record the assignments as 22.14 prohibited recording assignments; or---

because lenders were prohibited from recording, most Seller/Servicers failed to even execute the

assignments to Freddie Mac of their security interests [trust deeds] after the REMIC true sales.

Failure to endorse the note in blank, failure to execute an assignment of the trust deed to FM,

and failure to record the assignment after the true sale, violated not only New York Trust Law

[FMs choice of law in its REMIC trusts] but also IRS rules. These REMIC IRS regulations

strictly required that all true sales into REMIC trusts had to occur within a 90-day windowafter

the REMIC trust was declared. 26 U.S.C. 860A860G. Because Freddie Mac was exempt

from SEC oversight FM failed to comply with SEC regulations, as required in private MBSTs.

FM failed to comply with recording assignments at county recorders offices as mandated.

54. During foreclosures in which Freddie Mac PC holders owned a fractional beneficial

interest in debt obligations, plaintiffs and courts were/are misled into believing the Seller/

Servicers actually owned the loans because assignments to Freddie were never recorded.



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55. In this case, Seller/Servicer WELLS actively participated with Freddie Mac, and CWRC

in creating a pretext that WELLS owned the loan, when they all knew this was not the case.

Defendants concealed that a Freddie Mac REMIC trust held legal title to the security interest,

and that the true beneficiaries were PC holders, who each held afractional, beneficial interestin the intangible debt obligation created by the tangible note ALLES executed on 7/28/2006.

56. WELLS actually processed ALLES application for a loan modification, even though it

was Freddie Mac who should have processed an application as Trustee for PC holders benefit

This charade was perpetrated because all 3 defendants (Freddie Mac, CWRC, and WELLS)

knew Freddie Mac had an internal policy to deny modifications for REMIC trust loans4

EVENTS LEADING UP TO FORECLOSURE OF PLAINTIFFS HOME

57. For 6 years until mid 2012 plaintiff never missed a payment to her loan servicer WELLS.

Plaintiff paid nearly $100,000 [mostly in interest] to WELLS during that six year period. During

the past few years plaintiffs inoperable, incurable lung disease progressed to the point where she

became unable to work, even part-time, due to incessant coughing caused by the lung disease.

58. CWRC recorded Substitution of Trustee on 8/1/12 & Notice of Default 8/2/12 [Exh. E].

Both were deficient for several reasons. First, the beneficiary was listed as Wells Fargo Bank,

NA which was not true. Freddie Mac bought the loan on 9/13/06 but the assignment was

never recordeded. Secondly, the attached Declaration of Compliance [required by Civil Code

2923.5(b)] was fraudulent. It listed WELLS as beneficiary which was false because Freddie

Mac had purchased the loan on 9/13/2012. WELLS had not been beneficiary since 9/13/2006.

Third, the declaration recited that beneficiary tried with due diligence but was unable to contact

the borrower to discuss alternatives to avoid foreclosure. This was false. WELLS agents had

told Alles in 2011 she would not be eligible to modify her loan unless she stopped making

payments to trigger a default---rendering her eligible. No WELLS agent called her in 2012.

59. Counsel summoned NHSIE (Neighborhood Housing Services of the Inland Empire) who

is the HUD local agency affiliated with the Home Affordable Modification Program [HAMP].

4President Obama is in the process of appointing Mel Watts(Dem) to replace FHFA Director, EdDeMarco who ordered no forbearance on Freddie Mac loans, and strict denial of modifications



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60. The Treasury Department created HAMP in 2009 to stabilize the nations housing market.

WELLS executed a Servicer Participation Agreement ("SPA") on July 31, 2009 with Freddie

Mac [FHFA conservator] who is a government agent. WELLS agreed to apply the Treasury

Department's HAMP guidelines to all serviced loans. Lenders received millions in taxpayerfunds as incentives to modify loans for distressed borrowers to keep them in their homes.

61. Plaintiffs attorney worked for several months, first with NHSIE as intermediary, then

directly with Carmen Saldana, WELLS Home Preservation Specialist, trying to obtain approval

for a loan modification under the HAMP program. Plaintiff qualified under HAMP guidelines

because she is disabled, has a hardship and has sufficient income to pay a reduced interest loan.

62. On 11/8/2008 Carman Saldana, WELLS agent, sent plaintiff written notification that she

did not meet the requirements of the program because: Based on your documented income,

we are unable to create an affordable payment that meets the requirements of the program.

The letter recitedplaintiff could appeal WELLS denial and escalate a review to Freddie Mac.

63. It recited Your home will not be sold in a foreclosure sale during the appeal period.

A true copy of the letter from Carmen Saldana is included herein as [Exhibit F.] Despite this

written promise the following Saturday, on 11/17/12 an agent for CWRC posted aNotice of Sale

on plaintiffs house, reciting a sale date set for 12/19/12. [Exhibit G] Plaintiffs attorney made

an immediate written demand for CWRC to cancel the sale date, and made the same demand to

Carmen Saldana, WFHM Home Preservation Specialist. The demand was ignored by Trustee

CWRC who responded they could not cancel the sale unless WELLS ordered the cancellation.

64. On 11/23/12 plaintiffs attorney used the NPV calculation tool at HAMPs online website:

Make Homes Affordable (MHA) to calculate plaintiffs loan with actual accuracy. The NPV

toll populated results showing plaintiff was eligible for HAMP program relief [Exhibit H]

65. Notwithstanding eligibility, WELLS failed to modify its policies & procedures to ensure

plaintiff received equal treatment. WELLS failed to include, as Exhibit A to its denial letter, the

populated NPV results to support denial, as required by MHA rules. The missing Exhibit A

suggested that WELLS either did not populate NPV results at all, or the results showed Alles was

eligible so the results were omitted. ALLES realized the WELLS had no intention to approve a

modification, but rather intended to foreclose and steal her home on 21 daysNotice of Sale.



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HISTORY OF FREDDIE MACS SECURITIZATION WITHOUT SEC OVERSIGHT

66.Traditionally, a lender originated home loans by having homebuyers execute tangible notes

[promises to repay amortized principal and interest]. A lender could sue a homeowner to collect

unpaid balances upon default. In addition to a breach of contractremedy, lenders negotiated analternative method of repayment; i.e. lenders made owners pledge the real property as collateral.

The borrower was required to execute a mortgage (ordeed of trust) when he/she executed the

tangible note, granting the lender a Power of Sale to foreclose the real property upon default and

use the sale proceeds to pay off the loan. The lender held the borrowers tangible note in its own

loan portfolio. The lender recorded its security interest as a county lien against the real property.

Under the traditional lending model the potential lender had a financial incentive to ensure the

borrower could repay the promissory note and that the underlying property offered as collateral

to secure payment had sufficient equity value to repay the loan balance after a foreclosure sale.

67. To stimulate the economy and generate jobs, Congress passed the Tax Reform Act of 1986.

Congress created Real Estate Mortgage Investment Conduits [REMIC] to expand originations of

loans in a process calledsecuritization. Lenders could pre-sell loans during escrows and convey

intangible debt obligations created by tangible notes into mortgage loan pools [REMIC trusts]

Hundreds of thousands of electronic copies ofintangibledebt obligations were split off from

their corresponding tangible notes and conveyed into REMIC trusts to create special tax credits

for investors. Investors purchasedfractional beneficial interests in intangible debt obligations

in the REMIC trusts. Wall Street brokers marketed thefractional beneficial interests entitling

them as Collaterali zed Debt Obligation Certi f icates[CDO certificates] selling for $1000 each.

68. These Mortgage Backed Securities [MBS] were intended to give special REMIC tax credits

to stimulate housing and construction markets. Billions in profits & commissions were generated

for lenders, REMIC trustees and Wall St brokers as they transmuted intangible debt obligations

to bond securities entitled CDO Certif icates[similar to a bond]. They traded like security bonds.

69. This securitization ofintangible debt obligations altered the traditional lending model by

severing the direct link between the borrower and her lender, as well as the concomitant risks

associated with traditional portfolio mortgages, transferring risk of default to certificate holders.



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70. After a loan originator issued a mortgage to a borrower, the originator sold the mortgage

in a secondary market to a third-party financial institution. The originator collected origination

fees at closing from the borrower as well as the full loan balance from the financial institution it

pre-sold the loan to during escrow. This process created new capital to originate even more loanswhich is how Congress elected to stimulate the economy in 1986. The risk of borrower default

was transferred to investors who purchased CDO certificates [intangible debt obligations].

71. As borrowers made monthly payments of principal & interest the cash-flow was distributed

to investors. The typical participants in the securitization lending model are (1) a Loan Servicer

[the Sponsor]; (2) a Depositor of loans into a Special Purpose Vehicle (SPV) for securitization;

(3) an Underwriter of the MBST; (4) an Issuing Trust [Issuer of Participating Certificates]; and

(5) the Investors in the MBST [Participation Certificate holders in the Freddie Mac model].

72. Freddie Mac REMIC Trust Agreement required strict compliance with New York Trust law

FM soldfractional beneficial interestsin loan pools entitled, Participation Certificates [PCs]

through a pre-sale prospectus entitled, Participation Certificate Offering Circular. [Exh. I]

Freddie Mac guaranteed participants monthly yields on their investments regardless of borrower

default events, rendering those borrowerdefault events irrelevant to receipt of yield payments.

73. Freddie Mac was not required to register investments with the Securities & Exchange

Commission [SEC], due to a special exemption granted to GSEs by Congress. Freddie Macs

principal endeavor was to buy mortgages, establish Mortgage Backed Securities Trusts [MBSTs]

and then deposit the mortgages into the MBST upon issuing securities [Participation Certificates]

to investors. Freddie Mac often paid originating lenders [sellers] with Participation Certificates

in lieu of cash. The most likely destination of a mortgage Freddie Mac purchased was to be

conveyed into a Freddie Mac declaredMBST, as most mortgages it purchased were securitized.

74. Freddie Mac MBSTs differed from private MBSTs in that Freddie Mac guaranteed

monthly payments to investors regardless of borrower default events. The Freddie Mac PC

Trust investor bought a security, a Participation Certificate" [PC] much like a coupon bond for

afractional beneficial interestin intangible debt obligations created by tangible notes, with its

resulting cash flow. The PC investor received a fixed monthly coupon yieldfrom the mortgage

pool monthly proceeds, which were deposited by loan servicers as debtors made their payments.



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75. In worldwide market Freddie Macs guaranteed mortgages were seen as debts guaranteed

by the full faith and credit of the United States. The 2008 housing calamity and bank failures

obligated the federal government to treat the Freddie Mac guarantee as a federal obligation.

Freddie Mac must guarantee monthly coupon yields to all PC investors. Even conservativeinvestors bought Freddie Macs Participation Certificates simply because they were guaranteed.

76. Freddie Mac created MBSTs to provide Tax Benefits to investors, which would increase

liquidity in the secondary mortgage market. To qualify for pass-through treatment to investors

andFreddie Mac Corporate, Freddie Mac had to declare its MBSTs as valid REMIC Trusts by

following strictly applied IRS regulations on its formation and maintenance. The REMIC trusts

were created using New York Trust Law, which mirrored the same strict compliance requlations

promulgated by IRS on the creation and maintenance of REMIC trusts.

77.During a mortgage boom private & Freddie Mac MBSTs[$5 trillion in 15 million mortgages]

simplified the formation process by cutting corners. Freddie Mac could cut cornersbecause

1) it did not have to register participating certificates [PCs] with the SEC; 2) it controlled every

step without oversight by acting as Buyer, Issuer, Depositor, Trustee, and Master Servicer;

3) it created, supervised, controlled & audited its own financial records; 4) it disclosed nothing to

sellers, servicers, investors, SEC or the public. Freddie Mac was essentially autonomous, free

of government oversight, flush with cash, and was backed up with the full faith and credit

of the federal government. Managers thought Freddie Mac was insulated from failure.

78.Freddie Mac operated a blind investment as MBS Trustee rather than owner of the securities

As Master Servicer, Freddie Mac took a cut of all monthly cash flows collected by sub-servicers,

who also charged service fees for collecting principal and interest from borrowers. Freddie Mac

Trust transactions, acting as Sponsor, Depositor and Issuing Trust, were not arms-length

transactions. Freddie Mac controlled all 3 entities, taking a cut at each step in the process.

79. Under the standard securitization lending model, promissory notes weresupposedto be

sold and transferred into a trust pool [Mortgage Backed Securities Trust (MBST)] which holds

tangible promissory notes as collateral for Participation Certificates sold to worldwide investors.

80. In the ALLES loan, WELLS was Freddie Macs contracted sub-servicer and the SELLER.



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81. The "true sales" allowed originating lenders [like WELLS] to take loans [intangible debt

obligations created by tangible notes] off their accounting books, thereby eliminating a need to

maintain capital adequacy reserves against defaults. When originating lenders, who failed to

apply any underwriting standards because they incurred no default risks, approved thousands ofloans to anyone who applied, regardless of ability to pay, were hit with demands to buy-back the

defaulted loans, and investors discovered their dilemma, there was a run on the banks by cash

investors trying to withdraw deposits fearing loss of their cash. The run on the banks caused

many banks to collapse in mid-2008 resulting in government seizures of big banks who were put

into receiverships under FDIC, or in the case of Freddie Mac and Fannie Mae, were put under a

conservatorship by Congress, ie. Federal Housing Finance Agency [FHFA] soley for the GSEs.

82. Congress created the FHFA to act as conservator to Freddie Mac & Fannie Mae, to avoid

bankruptcy or FDIC receivership. Those options would have resulted in a total liquidation of

enterprise assets, such as what occurred with the failed banks when the bubble burst in 2008.

Under Freddie Mac Participation Offering Circular, dated 10/14/05, appointment of a conservator

was not a default event which could trigger investors rights to demand relief, as recited on p10:

83. Investors fixed monthly coupon yields were guaranteed by Freddie Mac, regardless of

borrower defaults. The following is from Freddie Macs Offering Circular, page 1, 10/14/05:



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84. In the worldwide market Freddie Mac guaranteed mortgages were viewed as equivalent to

a debt secured by the full faith and credit of the United States. The recent housing calamity, with

failures of major banks, obligated the federal government to treat the Freddie Mac guarantee as a

federal obligation. The Treasury has infused over $190 billion into the enterprises to date.85. Freddie Mac issued securities were exempt from SEC registration statement requirements.

In March 2003, Freddie Mac voluntarily started to register its common stock with SEC under

Section 12(g) of the Exchange Act, triggering a requirement to file periodic reports with SEC,

including annuals on Form 10-K, quarterly on Form 10-Q, and current reports on Form 8-K.

86. Typically Freddie Mac purchased mortgages in a bilateral or tripartite contract consisting

of Freddie Mac as purchaser, seller into the trust, the trustee, master servicer and trust custodian.

The originating lender was usually the sub-servicer or sponsor. By controlling every aspect of

its securitization Freddie Mac had little regulatory oversight. Freddie Mac held all the cards and

could do whatever it wanted. Concurrently, Freddie Mac raised an iron curtain of inscrutability.

87. The mortgage notes were to be endorsed in blank by the Seller/Servicer [WELLS herein]

and delivered to Freddie Mac for safekeeping. The Seller/Servicer who originated the loan was

required to execute an assignment of its beneficial interest in the security instrument [mortgage

or trust deed] but was told not to record the assignment. If necessary Freddie Mac could ask the

sub-servicer to record an assignment at a time unilaterally selected by Freddie Mac, per 22.14:

88. Wells Fargo Bank, NA, the party who is seeking to foreclose on the subject property, is not

the owner or legal holder in due course of ALLES note and thus lacks legal authority to foreclose

on the intangible debt obligation created by the tangible note. WELLS is only a sub-servicer of

Freddie Mac, as Trustee who is Master Servicer of all loans in each Freddie Mac REMIC Trust.

The sub-servicer of the loan has neither an equitable nor legal interest--or legal title to the loan.

89. Freddie Mac is trying to use a straw party [WELLS] to foreclose a loan on its behalf.

Freddie Mac, as trustee of the MBST does not own the loan either. Each of the PC Holders

owns a fractional, beneficial interest in each mortgage held in the REMIC Trust.



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WELLS Had Already Assigned Its Interest to Freddie Mac in 2006

90. The Freddie Mac Seller/Servicer Agreement required Sellers/Servicers to assign the

mortgage in blank to Freddie Mac but not to record the assignment. Freddie Mac is acting as

Trustee and not Freddie Mac Corporate. To make a deed effective in California, the grantoris divested of, and the grantee is vested with, the title, and the words "convey," "transfer," and

similar words used in conveying property, signify the passing of title from one person to another.

Under the Freddie Mac Seller/Servicing Agreement whenever Freddie Mac transfers possession,

and the Freddie Mac sub-servicer becomes the holder of the note, the following rules apply:

If a note is held at Freddie Macs DDC, Freddie Mac has possession of the note on

behalf of the servicer so that the servicer has constructive possession of the note

and the servicer shall be the holder of the note and is authorized and entitled to

enforce the note in the name of the servicer for Freddie Macs benefit.

This temporary transfer of possession occurs automatically and immediately upon

the commencement of the servicers representation, in its name,of Freddie Macs

interests in the foreclosure, bankruptcy, probate, or other legal proceeding,

acting in i ts own name, represents the interests of Freddie Mac in foreclosure

actions, bankruptcy cases, probate proceedings, or other legal proceedings.

In order to ensure that a servicer is able to perform the services and duties incident

to the servicing of the mortgage loan, Freddie Mac temporar il y gives the servicer

possession of the mor tgage note. If the note is held by a document custodian on

Freddie Macs behalf, the custodian also has possession of the note on behalf of the

servicer so that the servicer has constructive possession of the note and the servicer

shall be the holder of the note, is authorized andenti tled to enforce the note in the

name of the servicer for Freddie Macs benefit.

91. Freddie Mac ordered sub-servicers to create a pretext that they owned the mortgage.

The sub-servicer forecloses under its own name. Freddie Mac and sub-servicer understand the

proper ownership requirements, but yet follow the marching orders ofFreddie Mac Corporate,

who requires the seller/servicer to deliver an assignment to Freddie Mac in its corporate capacity,

rather than Freddie Mac as Trustee. WELLS and Freddie Mac conspire to defraud courts, and

other parties to enrich themselves at the detriment of those defrauded. WELLS never disclosed

Freddie Macs role in any pleadings and concealed FHFAs conservatorship from the court.



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92. Freddie Mac expressly directed WELLS, as sub-servicer, not to disclose the true facts.

Defendants, including their attorneys, work in concert to continue this charade and perpetrate

upon the courts, plaintiffs and the public through fraudulent recordings clouding titles.

93. WELLS counsel filed pleadings without ever disclosing to this court, or plaintiff, that thenote was sold to an MBS trust back in 2006 and that Freddie Mac acted as issuer, servicer, trustee

and custodian for the MBST. WELLS pleadings are a charade and obfuscation of the many roles

of Freddie Mac and identity of the true owner of the secured loan which is still in dispute.

Freddie Mac directs servicers to perpetrate fraud on the court and debtors who seek court relief.

Freddie Mac blackmails seller/servicers by denying them an opportunity to participate in future

originations unless they fully participate in the charade Freddie Mac thrusts upon the court.

94. A trust can be organized without a transfer of property to the trust. It can only come into

existence when property actually is transferred to the trust. The issuance of a certificate does not

constitute a transfer of property to the trust. Accordingly, there is no evidence from which a court

can infer such a transfer was actually made. That PCs were sold to investors who paid for them

does not prove the specific mortgage being foreclosed upon was ever transferred to the MBST.

LACK OF DELIVERY OF MORTGAGE & NOTE FROM FREDDIE MAC CORPORATE TO

FREDDIE MAC AS TRUSTEEVOIDED INSTRUMENT UNDER NEW YORK TRUST LAW

95. WELLS was supposed to assign Alles note & trust deed to Freddie Mac Corporate, who

was supposed to assign it to Freddie Mac Trustee for the REMIC trust. Freddie Mac Corporate

retained the loans it was supposed to assign to Freddie Mac Trustee, and failed to record either

assignment, violating New York Trust law and IRS REMIC regulations. Freddie Mac Corporate

continues to hold the loans in its own name and cannot even assure Certificate Holders that in a

forced liquidation the loans will be inaccessible from Freddie Mac Corporate creditors because

the mortgages were never properly assigned into the REMIC trusts when the trusts were created.

This is why the government put Freddie Mac into conservatorship rather than a liquidation.

96. Freddie Mac Corporatedoes not own the loan as it was required to convey the loan

into the appropriate Freddie Mac trust. WELLS concealed the true beneficiary from the

court and plaintiff, and continues to conceal the truth from this court and plaintiff.



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97. Neither Freddie Mac, nor WELLS, nor CWRC will disclose the name of the MBS Trust

to which the ALLES loan was conveyed into on the Freddie Mac settlement date [9/13/06].

Because WELLS had to assign the security to Freddie Mac under its Seller/Servicer Agreement

(see 22.14 above) on or about the September 13, 2006 Freddie Mac Settlement Date, there wasno beneficial interest that WELLS could have conveyed to Freddie Mac on December 7, 2012,

because WELLS had already assigned the note and trust deed to Freddie Mac on 9/13/2006.

CWRC knowingly & intentionally, fabricated & recorded a fraudulent instrument trying

to assign a security interest to Freddie Mac from Wells Fargo Bank, as its attorney-in-fact.

There was no beneficial interest to convey on 12/7/2012 as WELLS had already assigned its

beneficial interest in the security deed when it sold the loan toFreddie Mac Corporate 9/13/2006

98.The above recorded document contains all the indicia of a fabricated instrument intended to

defraud the public and the court. WELLS had already assigned its beneficial interest on 9/13/06.



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99. WELLS had no beneficial interest to assign after 9/13/06. CWRC had no attorney in fact

agreement with Wells recorded in Riverside County as required to convey real property interests.

100. CWRC stepped out ofits role as a purported impartial third-party trustee and into a role

as exclusive agent for Wells Fargo, who was not even the beneficiary. The Freddie Mac REMICParticipating Certificate Holders were the beneficiaries of ALLES intangible debt obligation.

Sub-servicer WELLS had no beneficial, pecuniary, or equitable interest in the note or security.

CWRC used a robo-signer to fabricate and record a fraudulent document to evade criminal

liability under Penal Code 115 for recording an instrument CWRC knew was a complete fraud

NEW YORK TRUST LAW REQUIRES ASSIGNMENTS TO BE RECORDED

101. Freddie MacCorporate sold the mortgages to the MBST. It had no right to continue to

hold the mortgages for its own account. Apparently it did not transfer the mortgages either to

the MBST or to Freddie Mac as trustee. If so, there would have been no need for CWRC to

fabricate WELLS purported assignment six years later. Freddie Mac could be holding the

mortgage notes as Master Servicer. Freddie Mac was Master Custodian. Neither the Master

Custodian nor Master Servicer holds any legal or equitable interest in the Trusts mortgages.

Arguably Freddie Mac Corporate holds the mortgages but a court sitting in equity would have to

conclude the mortgages were held by Freddie Mac as Trustee, on behalf of Certificate Holdersunder an equitable trust, subject to an equitable lien or subject to the security interest created in

the trust indenture. Freddie Mac elected to form the MBS trusts under New York trust law.

[ see Freddie Macs choice of law clause] MPCA 10/14/05 page 15 of 16

102. Because New York law governs a PC trust contract New York trust law must be applied.

Under New York trust law the assignment must be recorded upon delivery of the security.

103. The assignment WELLS was required to execute on or before September 13, 2006

[Freddie Mac closing date on purchase of the ALLES loan from its Seller/Servicer WELLS]

was ineffective under New York law because it was not recorded as required by New York law.



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104. New York adopted the Uniform Trust Act, which is silent about the procedure required to

transfer an interest in real estate to a custodial trust. The MBST created by the Trust Indenture is

a custodial trust under New York trust law. A mortgage is an interest in real estate, in judicial

and non-judicial jurisdictions. In a non-judicial jurisdiction the deed of trust conveys title tothe real property to the Trustee. California is a lien theory, non-judicial foreclosure jurisdiction

with race-notice statutes, mandating that assignments must be recorded to ensure lien priority.

Under race-notice statutes the first lien recorded has first priority, which is why one must record.

105. Even if the mortgage is legal and enforceable, and has been perfected against the debtor,

the mortgage has not attached to the trust or its beneficiaries. Freddie Mac was so accustomed

to making the rules without any SEC oversight that it ignored the basic legal premise those who

make the rules must obey the rules. Foreclosure and securitization must occur in accordance

with legal requirements under New York trust law and pursuant to strict IRS REMIC regulations.

106. Under these circumstances, enforcement of foreclosure on a loan claimed to be held in a

Freddie Mac MBS trust requires documentation to enable a court to ascertain upon whose behalf

the foreclosure is taking place. When the actual holder of the note is unidentified, it is impossible

to plead a cause of action in a federal or state court. Freddie Mac and WELLS failure to record

the assignment of its security interest, before they recorded a Notice of Default, has adverse

consequences in determining who holds the perfected mortgage and the non-negotiable tangible

promissory note. The Holder in Due Course ("HDC") status may not exist under the case at bar.

107. The MPCA & Master Trust Agreement provided Freddie Mac with the liberty to select

the loans for inclusion in its REMIC trusts. It authorized Freddie Mac to remove loans from the

mortgage pools from time to time for various reasons. Once a mortgage is reported by the public

search engine as having been acquired by Freddie Mac, the actual destiny remains a mystery.

It may: 1) hold the note in its own portfolio; 2) sell the note; 3) pledge or hypothecate the note;

4) securitize the note in a MBS trust; 5) securitize the note in more than one MBS trust; or

6) redeem or replace a note previously securitized.

108. Because Freddie Mac, CWRC, and WELLS have conspired and worked together to

conceal who the real beneficiary is on the note and/or security interest the court must afford

plaintiff a 14th

amendment due process right to determine true beneficiary through discovery.



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WELLS IS AN UNSECURED CREDITOR TRYING TO RECOVER ADVANCES

109. Wells Fargo Bank, NA---the party seeking to foreclose---is the sub-servicer who made

payments on behalf of plaintiff to a Freddie Mac Trust and wrongfully withheld that information

from the court and plaintiff. Payments made by the sub-servicer were not credited to the account

of debtor ALLES under the express written rules prescribed by Freddie Mac to its loan servicers.

WELLS, as sub-servicer for Freddie Mac, is wrongfully attempting to recover advances it

made as an unsecuredcreditor under the pretext of being the securedmortgage creditor.

110. Under the Freddie Mac Seller/Servicer guide, the Servicing Agreement, and the Master

Trust Agreement, the loan sub-servicer is required to make monthly payments from its own funds

if the debtor misses a payment because Freddie Mac guarantees monthly yields to all investors.

see servicer duties in the Master Trust Agreement MTA p. 13 of 26

111. A sub-servicer of either a portfolio or a MBST mortgage loan is required to advance

scheduled principal and interest payments until a delinquent mortgage loan is removed from

Freddie Macs active accounting records orfrom a PC loan pool. If the funds on deposit in the

sub-servicers Principal and Interest custodial account, on the day the monthly remittance is due

to Freddie Mac, are less than the amount of the required monthly remittance, the servicer must

make a delinquency advance by depositing to the Principal and Interest custodial account enough

of its own funds to make the total on deposit equal to the full amount of the remittance owed to

Freddie Mac. The sub-servicer may reimburse itself for delinquency advances from borrower

collections that are subsequently deposited to the Principal and Interest custodial account.



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112. Advances are not treated as loans to Certificate Holders. Interest payments received in the

form of advances are taxable to the Certificate Holder as interest income. Neither the MBST nor

its Certificate Holders is liable for advances made by the servicer. There is no real estate statute,

or state or federal decision holding that only the mortgage debtor may make a required payment.113. Any other person or entity can make the required payment on behalf of the debtor.

WELLS concealed from the court that monthly payments debtor failed to make to Certificate

Holders were being paid by WELLS as sub-servicer. Even if WELLS has a claim for repayment

against the debtor for advances made, such claim is not secured by the mortgage or real property.

The sub-servicer is not a secured party but rather a general creditor. It is a violation of law

to foreclose on real property to recoup advances made by a sub-servicer. It is no different

than if the note holder foreclosed on a mortgage note because the debtor failed to pay a

plumbing bill to the creditors brother-in-law. Only the owner of the note can foreclose.

114. The debtor is not a third party beneficiary of the Freddie Mac Seller/Servicer Agreement.

Debtor neither had knowledge of, nor agreed to advances paid by WELLS as a loan sub-servicer.

Advances paid by the sub-servicer were not for debtors benefit. Advances were paid because of

a Seller/Servicer Agreement with Freddie Mac, as the MBS Trustee. Advances are a concession

sub-servicers afford Freddie Mac as inducement to persuade the Trustee to use its sub-services.

ONLY FHFA, AS FREDDIE MACS CONSERVATOR HAD STANDING TO FORECLOSE

115. The remedy of foreclosure is limited to the note holder. If, for purposes of this argument

only, one assumes Freddie Mac, as Trustee, holds legal title and the beneficial title is in the

Certificate Holders, what claim held by the Certificate Holders has gone unpaid? NONE.

116. If the court finds that Freddie Mac has an equitable interest as Trustee of the MBST,

and the right to foreclose, such foreclosure must be brought by FHFA as conservator, who is

charged with preserving Freddie Mac assets for the benefit of taxpayers who maintain solvency.

117. Freddie Mac and WELLS deliberate and intentional efforts to conceal and obfuscate

will not be corrected in the future unless the court declines to provide equitable relief because

Certificate Holders were paid their monthly yields and suffered no consequences of the default.



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FREDDIE MAC HAS UNCLEAN HANDS

118. Freddie Mac repeatedly misstated its income, failed to keep accurate financial records,

operated a defective document control system, and engaged in financially imprudent transactions

resulting in insolvency. This is why the government seized the enterprise and placed it under aconservatorship. Due to the many roles Freddie Mac played in the securitization games, and

institutionalization of inscrutability, a court cannot ascertain who actually owns what where

Freddie Mac is involved as the purported beneficiaryor as the purported trustee of a trust.

119. Awarding any relief at this time would be premature since the correct party has not

sought foreclosure and due process requires the identity of the true beneficiary of ALLESs loan.

PC investors [the true beneficiaries] are protected by Freddie Macspayment guarantee, which

are underwritten by the full faith and credit of the United States, having taken the enterprises

under conservatorship and infused $190 Billion dollars of taxpayer funds to maintain solvency.

WELLS UNILATERALLY ALTERED ALLES LOAN CONTRACT WITHOUT CONSENT

120. WELLS unilaterally altered ALLES mortgage contract by restricting loan modification

without her prior written consent, in breach of the terms and conditions of her mortgage contract.

A modification of a contract is a change in one or more respects, which introduces new elements

into the details of the contract, and/or cancels others, but leaves the general purpose and effect

undisturbed. It is entirely competent for contracting parties to modify or waive their rights under

the contract and incorporate new terms into it. Hawkins v. United States, 96 U.S. 689 (1877).

Any contract can be modified by mutual agreement of parties. Wheeler v. New Brunswick & Co.,

115 U.S. 29 (1885). Two minds are required to change the terms and conditions of a contract

after it is executed. Whiteside v. United States, 93 U.S. 247 (1876); Riverside Rancho Corp. v.

Cowan, 88 CA.2d 197 (2d Dist. 1948). As executed, the mortgage is an agreement between a

creditor and debtor for a loan secured by real property. The terms and conditions of the loan can

be modified or amended only with mutual consent. One party may not amend the agreement

without the written consent of the other. A modification must satisfy all criteria of the

original contract. Carlson, et al v. Baldacci (1967) 257 CA.2d 212.



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121. Securitization imposed unilateral restrictions on loan modifications created by Freddie

Mac and WELLS as sub-servicer in an agreement not involving ALLES. These restrictions were

imposed without ALLES knowledge orconsent and constitute a material breach of contract,

which if proved would render the mortgage unenforceable.122. Freddie Mac tortuously interfered in a contract between debtor ALLES & creditor WELLS

and ALLES has a tort claim against Freddie Mac on this basis alone.

THE FM FOREIGN TRUST IS NOT QUALIFIED TO DO BUSINESS IN CALIFORNIA

123. The Freddie Mac MSB trust, on whose behalf foreclosure is allegedly being prosecuted,

must qualify to transact business as a foreign trust in the state where the real property is located.

The Freddie Mac trust in which the loan is securitized is not qualified to do business in California

Under securities law, if Freddie Mac organized an MBS trust and issued Participation Certificates

to investors in the United States the MBS trust must qualify to do business in the state in which it

seeks to foreclose upon real property. Foreclosure law ordinarily provides that a mortgage

creditor foreclosing on a loan is not transacting business and does not trigger qualification

compliance requirements. However, offering securities for sale to investors is conducting

business in the state going far beyond a residential lender. This requires the MBS trust to pay

fees and follow state prescribed procedures to qualify to transact business in this state. A foreigntrust which fails to register lacks standing to foreclose & could incur criminal liability for same.

124. A mortgage can be sold to another creditorwithout debtors consent. Alienation rights

are explicit in the mortgage. However, when the mortgage is securitized, much more is taking

place then a resale of the loan. As noted above, the terms and conditions of the mortgage were

unilaterally altered by the creditor without theborrowers consent. Under a traditional mortgage

model, the party holding the Power of Sale is the beneficiary who suffers a loss upon a default,

unless he forecloses to collect the debt from sale proceeds on property securing the obligation.

125. In securitization the mortgage is transmuted into bond securities, so the party authorized

to foreclose does not bear the loss resulting from a default. By divesting the incidence of loss

from the authority to foreclose, the original note has been altered---resulting in a material change

to the characteristics of the mortgage without the consent of the mortgagor---ALLES.



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126. ALLES was neither informed nor asked to consent to securitization of her mortgage loan.

Alles consent was required under basic contract law. Control of the mortgage was conveyed to

a group of strangers (Freddie Mac managers] who adopted a new set of rules modifying the terms

and conditions, as well as the characteristics, of the mortgage loan. These managers were not aparty to the original transaction, nor do they represent the original mortgagee or his successor.

127. Under the traditional lending model foreclosure was a last resort to curing a default.

In securitization it has become the first resort. The sub-servicer to whom the trustee delegates

authority to foreclose has a financial incentive in the fees generated by the foreclosure itself,

and the delays incident to actual foreclosure. The losses resulting from foreclosure are passed

back to the Certificate Holders. In short, the party who profits from foreclosure controls the

decision to foreclose, while the party bearing the loss has no say whatsoever in the decision.

128. Freddie Mac prescribed the terms and conditions for the loans it bought from sellers.

Foreclosure would provide unjust enrichment to WELLS through foreclosure fees [$6-$10,000]

and will result in a minimal $100,000 loss to taxpayers, who involuntarily infused $190 billion

into Freddie Mac. Denying foreclosure will not cause injury to the Certificate Holders who

are innocent of fraud on the court and who are guaranteed payments by sub-servicer WELLS.

129. Alles note is non-negotiable as it was conveyed into the trust as a true sale, as recited:

Master Trust Agreement p.8 of 26



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130. An absolute sale requires a transfer of title by a seller to a buyer without any restrictions

other than payment of an agreed-upon amount of money. There is evidence that such a transfer

never took place. ALLES mortgage was never assigned from Freddie Mac to the MBS trust,

and the mortgage note endorsed in blank is in the possession and control of Freddie Mac.Absent delivery and possession of the bearer note or a written assignment from Freddie Mac to

the MBS trust, there is no way legal title has been conveyed into the trust to enable foreclosure.

131. Plaintiff and similarly situated borrowers did not know and could not have discovered

this fraud. Plaintiff's note was not properly negotiated, endorsed, and transferred to the Freddie

Mac REMIC Trust. WELLS is trying to enforce an intangible debt obligation in which it has no

pecuniary, equitable or legal interest. Plaintiff applied for a loan modification after experiencing

unforeseen financial hardship. Plaintiff believed her lender was willing to avoid foreclosure

since WELLS agents advised her to stop making payments to qualify for a loan modification.

132. WELLS knew it was not a beneficiary with power to modify her loan based on guidelines.

WELLS & Freddie Mac never told Plaintiff why her application would be automatically denied.

Freddie Mac, WELLS and CWRC conspired to create a pretext that WELLS was the beneficiary

when all three defendants knew it WELLS was not the beneficiary, and Freddie Mac was not

either, and that WELLS intended to deny a modification before ALLES even applied for one.

133. Plaintiff has now discovered that her loan is actually owned by a Freddie Mac trust, and

that Freddie Mac's trusts do not fully participate in the Home Affordable Modification Program

[HAMP] and rarely approve modifications. Neither Freddie Mac nor WELLS are perfected,

secured creditors. Neither has a right to proceed with a foreclosure or deny modification.

DEFENDANTS FAILURE TO NOTIFY ALLES OF NEW BENEFICIARY IS FRAUD

134. Congress added 15 U.S.C.1641(g) to 131 of TILA by enacting 404 of The Helping

Families Save Their Homes Act of 2009, which required notification of a change in beneficiary:

IN GENERAL.- In addition to other disclosures required by this title, not later than 30 daysafter the date on which a mortgage loan is sold or otherwise transferred or assigned to a third

party, the creditor that is the new owner or assignee of the debt shal l noti fy the borr ower in

writ ing of such tr ansfer, including-(A) the identi ty, address, telephone number of the new

creditor; (B) the date of transfer; (C) how to reach an agent or party having author ity to act

on behalf of the new creditor; (D) the location of the place where transfer of ownership of the

debt is recorded; and (E) any other relevant i nformation r egarding the new creditor.



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135. WELLS & Freddie Mac intentionally failed to comply with requirements of TILA 131(g)

triggering liability for actual damages, legal fees & statutory damages under TILA 130(a),

applying to Freddie Mac as new owner of Plaintiffs loan and WELLS as its agent sub-servicer.

Neither Freddie Mac nor Wells Fargo ever notified ALLES of the new beneficiary, even afterCWRC recorded the new ownership on 12/7/12 with a fabricated assignment to Freddie Mac.

Freddie Mac and WEKKS violated 15 U.S.C.1641(g) by failing to notify Alles as mandated.

136. WELLSpurports to act as Freddie Macs agent without providing any evidence of agency.

If Freddie Mac is a legitimate new lender it was required to comply with TILA.15 USC 1640(g)

These violations cannot be ignored. Freddie Macs failure to comply was intentional omission

as part of the overall conspiracy to create a pretext that WELLS was the purported beneficiary

entitled to foreclose when in reality WELLS was/is only the sub-servicer, with no legal title or

beneficial interest in the intangible debt obligation created by the tangible note. WELLS is

nothing more than an unsecured creditor, with an unsecured equitable claim for reimbursement

for deposits it made on Alles behalfinto its principal & interest masteraccount, to be disbursed

to Freddie Mac, as trustee, when the guaranteed payments to PC holders come due each month.

PLAINTIFFS DAMAGES COMMON TO ALL CLAIMS

137. Plaintiff relied on Defendants misrepresentations and was damaged in the following ways:

(1) Plaintiff has been paying the wrong party for an undetermined amount of time and overpaid

in interest which was over calculated; (2) she has suffered damage to her credit; (3) the title to

Plaintiff's property has been/is clouded; (4) Plaintiff has been threatened and is facing imminent

floss of her residence; (5) Plaintiff has expended funds to cover fees and other related costs;

(6) she has suffered damage to her reputation in the community; (7) she is unable to

Cm-ecf Fac Final-filed W-exh May 9 2013

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Transcript of Cm-ecf Fac Final-filed W-exh May 9 2013